LONDON - WPP, the world's second-biggest advertising group, said on Friday that its third-quarter sales fell 8.7 percent on a comparable 12-month basis but showed an improvement from the previous quarter.

Excluding the impact of acquisitions and currency fluctuations, sales fell by 10.5 percent in the second quarter, the company said.

It described conditions as "less worse" in the three months to September.

"There is little doubt that consumer and corporate confidence has recovered somewhat from the panic levels of the fourth quarter of 2008 and first quarter of 2009," it said in a statement.

"Confidence, however, remains fragile amongst consumers because of the shadow of high unemployment levels and amongst corporates, because Armageddon and Apocalypse Now were barely avoided in September 2008," it added.

"As many clients' earnings results show, increased or maintained profits or margins are being achieved by cutting costs, not through increasing revenues."

WPP warned that although it expected the improvement to continue in the fourth quarter into 2010, much would depend on when governments begin withdrawing the stimulus measures that have keep their economies afloat through the crisis.

"The real test may come when governments and independent central banks decide to reduce or withdraw fiscal and monetary support to avoid higher interest rates and inflation ... this may have the impact of reducing demand dramatically."

The company added that over the nine months to September, it had cut its workforce by 10 percent to 101,133.